16 Return of income – Revised return – Due date u/s. 139(1) – Delay in filing return – Condonation of delay – Where assessee-company could not file return of income u/s. 139(1) before due date on account of some misunderstanding between erstwhile auditor and assessee and, assessee could not even obtain NOC from said erstwhile auditor immediately for appointment of an alternative auditor, in such circumstances, delay of 37 days in filing return of income alongwith audit report was to be condoned

REGEN
Powertech (P) Ltd. vs. CBDT; [2018] 91 taxmann.com 458 (Mad);

Date
of Order 28/03/2018:  A. Y. 2014-15:

Sections
139(1) and 119(2)(b); Art. 226 of Constitution of India

For the A.
Y. 2014-15, the assessee-company could not file the return of income u/s.
139(1) of the Income-tax Act, 1961 before due date on account of some
misunderstanding between erstwhile auditor M/s. S. R.Batliboi & Associates,
Chartered Accountant and assesee and, the assessee could not even obtain NOC
from erstwhile auditor immediately for appointment of an alternative auditor.
The erstwhile auditors gave NOC on 15/12/2014. The new Auditor viz., M/s.CNGSN
Associates had completed the audit work and issued a Tax Audit Report dated
29/12/2014 and the petitioner Company, based on this, uploaded the Return Of
Income on 07/01/2015 along with the Tax Audit Report.

The
petitioner Company wished to file a revised return of income, after making
certain modifications to the earlier one, which is uploaded on 07/01/2015. Such
filing of the revised return is possible only if the original return had been
filed within the time prescribed u/s. 139 (1) of the Act. Therefore, the
petitioner company made an application to CBDT u/s. 119(2)(b) of the Act for
condonation of delay of 37 days in filing the return of income and accepting
the return of income filed on 07/01/2015 as filed u/s. 139(1). By an order
dated 01/06/2016, CBDT refused to condone the delay. The petitioner company
filed a writ petition before the Madras High Court and challenged the said
order of CBDT.

The Madras
High Court allowed the writ petition and held as under:

 “i)  It
is pertinent to note that without the Tax Audit Report u/s. 44 AB, the return
of income cannot be filed and the same will not be accepted by the System as a
correct return. According to the petitioner, the Auditors were delaying the
process of audit completion without proper reasons inspite of the petitioner
providing expert valuation report from other professional firm to satisfy their
concerns. The petitioner, left with no other alternative, but to look for an
alternative Auditor, after getting the NOC from M/s. S. R. Batliboi &
Associates. Thereafter, the petitioner Company appointed M/s.CNGSN Associates,
LLP, Chartered Accountant, Chennai as their Tax Auditor and requested them to
prepare the Tax Audit Report. The assignment was accepted by M/s. CNGSN
Associates on 29/11/2014, subject to NOC from the existing auditors viz.,
M/s.S.R.Batliboi & Associates. M/s.CNGSN Associates, by their letter dated
29/11/2014, also requested M/s. S. R. Batliboi & Associates to issue NOC.
However, no such NOC was given by the erstwhile Auditors. After repeated
requests made by the petitioner, M/s. S. R. Batliboi & Associates gave
their written communication dated 15/12/2014 expressing their inability to
carry out their audit and to issue a report.

ii)    It is pertinent to note that the petitioner
cannot appoint an alternative Auditor without getting the written letter/NOC
from the existing Auditor. Thereafter, after getting NOC from the erstwhile
Auditor, the petitioner uploaded the return of income along with the Tax Audit
Report on 07/01/2015, hence, there was a delay of 37 days in filing the Return
Of Income. By delaying the submission of the return of income, the petitioner
did not stand to benefit in any manner whatsoever.

iii)   When the petitioner had satisfactorily
explained the reasons for the delay in filing the return of income, the
approach of the 1st respondent should be justice oriented so as to advance the
cause of justice. The delay of 37 days in filing the return of income should
not defeat the claim of the petitioner. In the case of the petitioner failing
to explain the reasons for the delay in a proper manner, in such circumstances,
the delay should not be condoned. But, when the petitioner has satisfactorily
explained the reasons for the delay of 37 days in filing the return of income,
the delay should be condoned.

iv)   Since the petitioner has satisfactorily
explained the reasons for the delay in a proper manner, I am of the considered
view that the 1^st respondent should have condoned the delay of 37
days in filing the Return Of Income along with the Audit Report.

v)   In these circumstances, the impugned order
passed by the 1st respondent dated 01/06/2016 is liable to be set aside.
Accordingly, the same is set aside. The Writ Petition is allowed. No costs.”